Following is the transcript of Sen. Phil Gramm's news conference where
he and his wife Wendy discussed his pending retirement.

GRAMM:
When I ran for Congress 25 years ago, I promised the people of my district
that I would go to Washington and work to put the federal government on
a budget; to put more money back in the pockets of the people who earned
it; that I would work to pass power back from the federal government to
the states, to the counties, to the cities and to the people; that I would
work to reform welfare, to rebuild national defense and roll back the
borders of international communism.

Today I can stand before you and say that not only did I fight for these
things, not only did I play some leadership role in each and every one,
but that, remarkably, they all happened.

The budget is balanced.

(APPLAUSE)

The budget is balanced. First working with President Reagan and now with
President Bush, we've cut taxes twice. Never in American history has so
much power been passed back from the federal government to the states
to the counties to the cities and to the people, than in the last 25 years.
We did reform welfare. We reduced the welfare rolls by 50 percent, and
we gave America and millions of our citizens a new dignity and meaning
in life that they had never had.

With Del Latta in 1981, I wrote the first Reagan budget--the Gramm-Latta
budget that rebuilt national defense and that laid the foundation for
a program of peace through strength; the Reagan program that tore down
the Berlin Wall, that liberated Eastern Europe, that transformed the Soviet
Union and that changed the world.

Remarkably, the things I came to Washington to do are done. Now, I know
that no victory is ever final. I know that all these battles will have
to be fought again by other generations, and I know that there are new
challenges that face America. But what better time to call it a career
than when you've finished the work that you were initially sent to Washington
to do?

Of equal importance to me, I can leave the Senate at the end of this
term with absolute confidence that a Republican will win my seat. Eighteen
years ago, when John Tower decided not to run, it was far from certain
that a Republican would win his seat.

Today Republicans dominate Texas politics, we hold every statewide office
and I can announce today that I'm leaving the Senate with absolute confidence
that the person who takes my place will share my philosophy and my values,
but of greater importance, that they will be a Republican who shares the
philosophy and the values of working men and women in Texas.

After a long and difficult period--in fact, the hardest decision I've
made in public life--I have decided to announce today that I will not
seek reelection to the United States Senate. At the end of this term,
I will end my period of public service.

I'd like to say to the people of Texas that it's been the great privilege
of my life to represent you in the United States Senate. I want to thank
the people of Texas for standing up with me and for me, whether it was
electing a young idealistic economist professor to the Congress or whether
it was hearing me out on one of hundreds of votes that I cast that were
immensely unpopular, the people of Texas were willing to hear me out and
sometimes agree that I was right.

I have spent two-thirds of my adult life in the service of Texas and
America, and I want to say that I have loved absolutely every minute of
it. I am profoundly grateful for having had the opportunity and all that
I am I owe to the people of Texas.

I want to thank my wife Wendy and I want to thank my sons, Marshall and
Jeff (ph), for their steadfast support. And I want to thank them for not
complaining about all the important events of their life that I have missed.
I'm very grateful that they realize that I missed those events in the
service of the greatest state in the greatest country in the history of
the world.

(APPLAUSE)

I want to thank my great staff. I want to thank them for doing all the
work the large and small things that made it possible for me to do my
job. I want to thank Ruth Cymber, who came to Washington with me and who
has dedicated 25 years of her life to serving me and to serving the people
of Texas and America.

I want to thank Larry Neal, Dick Ribbentrop, Wayne Abernathy (ph), John
Sabrecool (ph), Steve MacMillian (ph), Mike Solin (ph), Linda Lord (ph),
Jeb Hinserling (ph), Phil Wilson (ph), everybody gathered here today and
everybody who's gathered in my offices in Texas. Each of you deserve much
of the credit for all that we've done in Washington, D.C., and I want
to (inaudible).

While I'm announcing today that I'm not running again, I'm going to be
the United States senator from Texas for 15 more months. And I intend,
as I have in the past, to represent people like Dickey Flat (ph), the
people who do the work and pay the taxes and pull the wagon in my state.
The working people of Texas deserve to have their voice heard on issues
like Medicare reform and like restructuring Social Security. And I'm going
to work to assure that that voice that is heard on their behalf is a roar
and not a whisper. As long as the people of Texas and America pay my salary,
I'm going to give them their money's worth.

On a personal note, leaving the Senate for me is bittersweet. The sweetness
is going home to Texas, going to the ranch, and freedom, the opportunity
to have one more career. The bitterness is that I will miss the arena
and the cause and my colleagues and the challenge of doing the important
noble work that is entailed in representing the greatest democracy in
the world.

I know it's conventional when people close out a public career these
days to talk about how that they've become cynical and that they're disillusioned.
Let me conclude my remarks by making it clear that I am not cynical and
I am not disillusioned. I do not love government; great understatement.
But I have more confidence in government today than I did 25 years ago.

I love my colleagues. I have enjoyed having the opportunity to serve
with them. America is blessed to have great men and women working in the
Senate, both Democrats and Republicans.

I will leave the Senate in 15 months, being very proud that I came, and
extraordinarily proud in what I've done while I've been here.

So this has been a great privilege for me to represent the people of
Texas. It's obvious that it's an emotional moment when you end a 25-year
career. It's been a great career. And you could grow old listening to
me about all the blessings I've had in this job.

QUESTION: Senator, about five weeks ago you had said that you were going
to run for reelection. What happened in the intervening time to make you
come to a decision...

GRAMM: Well, it was a combination of two things. First of all, one of
the reasons that I'm announcing this so early is is that I have a few
gifts as a politician, but I'm not very good at saying things that I know
is not so.

This has been a hard decision for me. I've gone back and forth. I've
been torn by people who wanted me to run. When you represent 20 million
people, you build up a lot of loyalty to those people. I'm sure a lot
of people at home are going to be disappointed about my decision.

But I felt for all the reasons I've outlined in the statement I made
that it was time to quit. I think the time to end your period of public
service is when you've completed the mandate that you were given to begin
with. I feel I've done that.

And when I became absolutely certain that I was not going to run again,
obviously there were some people I had to talk to, and whenever you do
that, word starts leaking out.

But I feel comfortable with this decision. I believe I'm making the right
decision for me, for the 20 million people I represent, and for the things
I believe in.

QUESTION: And if the Texas A&M president's job were to be offered
to you, is that something that would cause you to leave early?

GRAMM: Well, I don't want to--obviously when you're giving up one career,
you don't want to be writing anything in or anything out about another
career.

I love Texas A&M; But you know, one of the things I've always felt
is is that when something is as close to you as that is to me, maybe it
would be best if I weren't on their payroll. I don't want anything to
happen there that could in any way change my feelings about things. So
I don't know.

I've been in academics.

I know academic politics are a lot tougher than the politics I've been
involved in. But I'm looking--when this career is over, I'll start thinking
about a new one. And fortunately, I'm leaving the country in great hands,
the economy's going to get strong in 15 months, I expect there to be a
lot of things out there I could do.

QUESTION: Senator Gramm, have you discussed anything with President Bush
about a possible appointment in the Bush administration, maybe something
on the Federal Reserve Board?

GRAMM: No. I talked to the president. I told the president about my decision
as usual. The president obviously was not happy that I was leaving. We're
very close, but the president knew that I'd made the decision, and he
was very supportive.

But, no, I'm not seeking any appointment. I don't expect any appointment.
I believe that in 15 months I'm going to end my period of public service,
and look, I'm not looking for any more.

QUESTION: (OFF-MIKE)

GRAMM: Well, you know, I'm not ever going to say "never." You
know, if Coca-Cola called me up today and offered me $50 million to put
the fizz back in Coke stock, I might be tempted. But I got no reason to
think that they're going to do that.

Look, I've had as close to a picture-book career public service as you
could have. And I don't expect any more, and I'm not looking for any more.
I want to have the chance to go out and have one more career, whether
it's running a business or being a goat herder or whatever, all those
options are out there.

QUESTION: What advice would you leave the Republican Party for making
sure that the party continues to grow?

GRAMM: Well, my advice--first of all I'm not going to get involved in
the primary. I'm sure that a lot people are going to run for my seat.
Texas has got a very deep bench on the Republican side of the aisle. I
think a lot of people will run. I'm not going to play favorites.

I am certainly going to work hard to see that the Republican nominee
is elected. I would be embarrassed if that didn't happen.

QUESTION: What advice would you give the president to put the fizz back
into the U.S. economy?

GRAMM: Well, he took some advice that I gave him, which was to cut taxes.
I think maybe it's time to do it again. I think we ought to cut the capital
gains tax rate.

It would put revenues in the coffers for the next two years. It would
stimulate the economy.

But look, this absurd criticism the Democrats are making that somehow
it's the president's fault that the economy is down, it just won't bear
up under scrutiny. And this complaint about the surplus--I mean, these
are the same people that for the next three months are going to be screaming
for more spending. I don't understand how politically they can possibly
gain from what they're doing.

QUESTION: A Texas-related question (OFF-MIKE)

GRAMM: I don't think race has anything to do with it. I think, quite
frankly, in modern American politics, there's too much preoccupation with
race. My advice to the 20 million people I work for--first of all, people
that were smart enough to elect me three times, and elect me as both a
Democrat and a Republican to the House, don't need much advice from me.

But my advice to them is to elect the best person you can elect. If that
person's Hispanic, great. But whatever they are, elect the best person
you can elect, because this is serious business around here. Those of
you who cover this beat know we're shooting with real bullets. We're making
real policy and they affect real people every day. And I just think in
Texas and everywhere else, there's just too much preoccupation with race.

QUESTION: Did losing your chairmanship have any impact on...

GRAMM: No. The plain truth is, I spent almost my whole career as a private
in the Army here. The influence that I had was influence from ideas. And
it made no difference whatsoever. If we were still in the majority, it
would actually be easier. Had Vice President Gore won, I couldn't have
not run again.

But, you know, we got a president that I have total confidence in. The
country's in good hands. And it gives me the luxury of doing what I'm
doing.

QUESTION: Senator, I was wondering if you've made a call to (inaudible)
of Texas to talk (inaudible).

GRAMM: Oh, I did.

QUESTION: And what did he say?

GRAMM: Well, he was not happy that I was doing it. He understood it.

QUESTION: Senator, Democrats are taking your retirement as a sign that
you know the Republicans aren't going to be able to (inaudible) the Senate
and you won't be (OFF-MIKE). What makes you think the Republicans can
be (OFF-MIKE)

GRAMM: Let me just, first, be sure that everybody understands that I'm
leveling. My chairmanship didn't have anything to do with this. I enjoyed
being chairman. I think we got a lot done. We passed a historic banking
bill; has my name on it. Probably 50 years from now, somebody will look
at my picture on that wall and say, "You know, I don't remember that
guy, except for Gramm-Leach-Bliley." It's very humbling.

If you want to get humbled in my job, open up a desk in the Senate and
look at the names of all these men, mostly, who were great luminaries
in their day and you don't even remember who they were.

So, but being chairman had nothing to do with it. Quite frankly, I think
we have an excellent chance of taking the Senate back.

And for me, from my own personal point of view, it's a luxury to be able
to not run. And I feel confident about the future. I feel confident about
the economy. I feel confident about the Republican Party.

QUESTION: Senator, on the deep bench on the Republican side, who would
be considered the front-runners to replace you?

GRAMM: I think there are a lot of them. I think we got 15 people that
could be credible candidates. Again, I'm going--one of the things that
I decided in thinking about this thing was that I wasn't going try to
pick my successor--I wasn't going to play favorites. You know, I'm close
to a lot of people. A lot of these people are, sort of, my students, my
allies. And I love them all in different ways. I think they have different
abilities, but ultimately it's not what I think, it's what the 20 million
people of Texas think.

QUESTION: You mentioned missing all the family events. I was just wondering,
on a personal note, how much of those did you miss and in the end, looking
back, was it worth it on a personal level?

GRAMM: Well, the last part is easy: Yes. No question about that.

QUESTION: How big a cost is that?

GRAMM: Well, look, anybody who takes on public service that does not
know that there are costs involve, doesn't understand the job. So I missed
a lot of things. But they were worth it, no doubt about that.

QUESTION: (OFF-MIKE)

GRAMM: Did you want to say what you had to say about it?

(LAUGHTER)

WENDY LEE GRAMM: I said it was his decision. He said, "That doesn't
help."

(LAUGHTER)

GRAMM: No. Look, it was a hard decision to make.

You know, I can stand up here and say, remarkably, that I've been part
of doing everything I promised to do when I ran, but I know those battles
will be fought again. I mean no victory is final, and no defeat is final.

So it's hard, but look: It's been a great career. I'm very proud of it.
And while I get emotional about it, this is a happy day. I'm heading for
Texas, for the ranch, for freedom. Those are all good things.

QUESTION: This question is actually for Mrs. Gramm, as well. You have
your own stellar Washington career here, and you're currently a sitting
economics professor at George Mason, correct?

W. GRAMM: No. The Mercatus Center at George Mason, yes.

QUESTION: What is your plan? Do you plan to go back to the ranch in Texas
in 15 months?

W. GRAMM: Yes.

QUESTION: You do?

W. GRAMM: I sure do, thank you.

QUESTION: Are you retiring as well?

W. GRAMM: Well, I retired twice before. So you still manage to stay active.

(LAUGHTER)

But I came to Washington 20-some odd years ago, and it's been a great
time here. I look forward also to getting back to Texas.

QUESTION: Senator Gramm, you said that the (OFF-MIKE) what's happening
in the economy. And while you completed your mandate, you worked hard
for the Reagan tax cuts. Some say that led to deficit spending. And now
there's a lot of concern this week that this latest round of tax cuts
could lead to deficit spending. Can you address that?

GRAMM: Well, first of all, had I known, when we wrote the Bush tax cut,
that the economy was as weak as it is turned out to be, I would've want
to cut taxes more not less. If I had had then the perfect hindsight that
I have now, I would have argued for larger tax cuts, and some business
tax cuts.

So the criticism that Democrats are making, that we cut taxes too much,
even though their tax cut would've been bigger this year, and would've
created the bigger problem this year, I just think doesn't make any sense.

So, look, I've never supported a tax cut I was unhappy with. I have always
been happy with the tax cuts I've supported. And I still believe that
government is too big, too powerful, and too expensive, and too intrusive
in the economy. And I think that Bush is doing the right thing, and I
think our answer to the Democrats is, we need to cut taxes again. We need
to cut the capital gains tax rate. That would help the market, it would
help business, it would help the economy, it would put more revenues in
the coffers for the next two or three years.

QUESTION: What do you want to accomplish before you leave out?

GRAMM: Well, I'm going today to the floor to debate the Export Administration
Act. I hope to see it passed.

I have a fee bill, which has passed the House and the Senate in different
provisions, which is a major tax cut for every saver, every investor,
every retiree in America. The excessive fees we pay to the SEC cost a
schoolteacher about $15,000 over her working life in excessive fees that
could go to her retirement. I want to get that bill passed.

I want to write a Medicare reform bill that adds prescription drugs from
my mama, but that doesn't bankrupt Medicare.

I'd like to at least get the intellectual debate on an investment-based
Social Security system set before I leave. Those are things I want to
do.

QUESTION: Senator Gramm, have you ruled out any private role in Washington,
such as something on K Street?

GRAMM:I haven't ruled anything out or anything in. I've got a job for
15 months, and obviously I focused on all these things now in making this
decision, but now for the next 15 months I can focus on doing my job.
When that's over, the economy hopefully will be booming in 15 months,
and whether it's Coca-Cola or whoever, I'll be there if they knock on
the door. But until then, I better do the things I'm doing.